Illinois' Medicaid money to hospitals MIA

Friday

The state’s plan was to send extra money to the hospitals that handle the most Medicaid patients.

But the short-term prognosis for the additional $470 million this year is gloomy.

The state was supposed to make the payments in the spring. The way it looks now, they may not happen until well into the next budget year.

"There’s a variety of different programs that we anticipate using this money to support. And if it doesn’t come, we’ll have to rethink how we’re going to support those programs," said Rich Walsh, chief operating officer at SwedishAmerican Hospital in Rockford.

Among other projects, Walsh said, the hospital was counting on the money to bolster its labor/delivery unit, which handles the lion’s share of local Medicaid pregnancies, and use $8 million to $10 million to buy the old Highland Hospital in Belvidere.

The absence of the state money, however, puts a crimp in the plans.

The promised infusion of cash is on top of the state’s standard reimbursements for Medicaid expenses. And because those payments routinely run late, hospitals around Illinois were eagerly anticipating the extra help.

The three-year plan works by shuffling money between the state and hospitals, thereby triggering federal reimbursement.

Hospitals gain $1.4 billion over three years, or $470 million each year. The state wins a three-year total of $390 million for its other health-care expenses, according to the Illinois Hospital Association, and the feds pick up the bill: $1.8 billion.

Lawmakers sent Gov. Rod Blagojevich a measure June 14 authorizing the state to spend $1.2 billion to start the process.

But Blagojevich never acted on it. Because the bill also appropriates money for lawmakers’ pay raises and other controversial matters, critics believe the governor is using it as leverage in overtime budget negotiations.

"It all has to do with the other things that are included (in the measure), the pay raises being part of that," said Howard Peters, executive vice president of the Illinois Hospital Association.

Blagojevich spokesman Justin DeJong ignored a range of questions Friday. He said only that Blagojevich had until Aug. 13 to act on the bill.

But even if Blagojevich approves the spending authority, it expires Aug. 31. The state may not have time to dispense the entire $1.2 billion because it probably would release it in chunks, not all at once.

And even if the state could spend all the money by Aug. 31, it may not have the money to spend. The state has just $9.7 million in the account dedicated to the program.

In the spring, the state borrowed $900 million to kick-start the program. But it couldn’t spend that money because lawmakers had not yet authorized the spending.

In June, the state paid off the loan using the money it had collected to bankroll the program — plus $12 million in interest.

The state completed the first year of the program in the spring, albeit belatedly. At issue now is the second year.

If officials can’t execute the second-year payments by Aug. 31, they hope to double the hospital aid appropriation — to $2.4 billion — in the upcoming budget year to make up for it.

Sen. Jeff Schoenberg, an Evanston Democrat who spearheaded the program, said Illinois could use another short-term loan, together with cash in its "rainy-day fund," to restart payments and complete the second-year cycle by Aug. 31 if Blagojevich approves the spending.

But Comptroller Dan Hynes can’t direct rainy-day funds to hospital aid without a law directing him to do so, said Carol Knowles, his spokeswoman. She said it’s premature to talk about borrowing because "there’s no formal (spending) proposal."

"The state borrowed money back in February," she said. "We were ready for months and months and months to execute this program. The (Blagojevich) administration failed to execute the program."

Staff writer Aaron Chambers may be reached at 217-782-2959 or achambers@rrstar.com.